Savers missing out by not switching

Published by Rebecca Atkinson on 27 January 2009. Last updated on 27 January 2009

A third of savings accounts now pay less than 0.5% while 16% pay a measly 0.1% or less.

The latest figures from British banks show that savings deposits increased by £4 billion in December, yet tens of thousands of people are earning next to nothing on their nest-eggs because of historically low interest rates. At the same time, high inflation is eroding the value of people’s savings.

According to uSwitch.com, 329 accounts now pay 0.5% or less. Meanwhile, 23 pay as little of 0.05%, which means someone with £2,813 in such an account will earn just over 12p per month.

However, by moving their money to one of the more competitive accounts still on the market, savers could earn significantly more. An account paying a fixed-rate of 4.65% AER would deliver a return of around £130.80 a year on the same balance of £2,813, according to uSwitch.com.

Louise Bond, personal finance manager at uSwitch.com, says: “With more than one in three accounts offering returns of less than 0.5% AER, consumers really must keep an eye on their rates and switch to a better account if they need to.”